The future of Battersea Power Station is in doubt again after lenders to the
Irish property company attempting to redevelop the site called in Ernst &
Young as advisors.

Real Estate Opportunities is seeking to sell a 50pc stake in the power station in order to fund a £5.5bn regeneration project but progress has been delayed and it faces August 31 maturities on more than £400m of debt.

Lloyds Banking Group is understood to have appointed E&Y to review the sales process and also provide insolvency advice. The bank, alongside Ireland's National Asset Management Agency, has a £260m facility secured against the scheme due to expire on August 31.

However, sources close to REO said banks were "supportive" of the sale process and E&Y has been brought in to analyse offers.

Sovereign wealth funds are understood to have expressed an interest in acquiring a 50pc stake in the power station. REO is now also considering the sale of the entire site, valued at £500m, and maintaining an interest through a profit-share agreement.

A spokesman for REO said yesterday: "A number of offers have now been received and final discussions to conclude the investment process are taking place."

The power station is one of London's most recognisable landmarks but has lain dormant since 1983, despite attempts by a collection of owners to revitalise it, including a proposed theme park development.

The proposals by REO and its development partner Treasury Holdings include 10m sq ft of offices, shops and 3,400 homes.

As well as the bank debt, REO owes £146m to Victor Hwang, the Asian tycoon from whom the company acquired Battersea Power Station for £400m in 2006. This also matures on August 31. REO's debts stand at £1.5bn and it has already swapped roughly 33pc of the equity in the power station vehicle for bank and bondholder debt.

REO added: "The lending banks, Lloyds Banking Group and NAMA, are currently supporting this [the bid] process.

"Ernst & Young are advising the lending banks in regard to BPS including specific advice in respect of the investment process including the review of the incoming proposals."